The Moveable Property (Security Interest) Act 2016

In early 2016, the Zambian National Assembly enacted the Moveable Property (Security Interest) Act No 3 of 2016 (‘MPSIA’). The 2016 Act aims to provide for the creation of security interests in moveable property, harmonize secured transaction laws, and minimise transaction costs by improving information conditions in the lending economy.

The 2016 Act is modelled primarily on Canadian, Malawian and New Zealand legislation, but is also influenced by the UNICTRAL Legislative Guide and a draft UNCITRAL Model Law.

The scope of the Act is wide, creating a unitary model for personal property security interests. Section 2(1) defines a security interest as ‘a property right in moveable property that is created by agreement and that secures performance of an obligation’ which includes charges, consensual liens, retention of title or rights under financing or operating leases (save an exception if an operating lease is less than for one year).

Pursuant to Part II of MPSIA, an electronic Collateral Registry for security interests is to be created and maintained. It provides that creditors can file “financing statements” with the registry for the purpose of registration. These statements will be filed at the Registry, and made accessible to any parties wishing to conduct a search (s.26 MPSIA). The Collateral Registry has been established by the Patents and Companies Registration Agency (PACRA) late 2016. Further information on the Collateral Registry is available here.

Parts III – V of MPSIA deal with the creation and effectiveness of security interests, their perfection and priorities of competing interests.

As for perfection, a security interest must be created and a financing statement relating to it either registered, the secured creditor taken possession of the collateral, or the secured creditor (or agent) has control of the collateral that is a bank account (s.44 MPSIA). Control is automatic if the secured creditor maintains the bank account, or otherwise requires a control agreement which is where the bank agrees to follow the instructions of the secured creditor without further consent of the debtor (s.44(3)). Sections 46-47 deal with continuation of perfection or temporary perfection for 21 days of proceeds of the security interest. If a security interest is not perfected in accordance with the Act it will not be effective against third parties (see the definition of perfected security interest in s.2(1)).

Priorities, predictably follow, as outlined in s.52 MPSIA. A perfected security interest has priority over an unperfected one; between two perfected security interests the priority is determined by whoever perfected first; and two unperfected security interests is the date of creation of the security interest. Supplemental provisions in Part V deal with priorities for proceeds, transferred security interests and subordination.

The reforms in MPSIA will likely go a long way in improving conditions for finance for small and medium enterprises in Zambia, by increasing their access to credit. By 2020, the State hopes to facilitate $2 billion in financing to firms and benefit 6,500 SMEs, 1,200 micro enterprises, and 1,200 women entrepreneurs.

Reforms in 2017

In 2017 Zambia enacted a new Corporate Insolvency Act 2017 and Companies Act 2017, replacing and codifying the older laws.

The Corporate Insolvency Act provides for business rescue proceedings, schemes of arrangements and winding up proceedings.

Part XI of the Companies Act has some additional provisions relating to the issuing, registering and priorities of debentures issued by a company – effectively by way of a floating charge.


The Moveable Property Security Act 2016 can be accessed here.

The Corporate Insolvency Act 2017 can be accessed here.

The Companies Act 2017 can be accessed here.


Last Checked August 2020

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